Later this week, the House is scheduled to consider H.Con.Res. 112, the FY2013 Budget Resolution.
Well then. Congressional budgeting.
I’d like to discuss one particular institutional feature of the appropriations process — the 302(b) allocations of the Appropriations Committee — but in order to understand that, you need at least something like a bare-bones understanding of the overall congressional budget process, which is as complicated as anything else that occurs in the House and Senate. So let me take two paragraphs and try to succinctly lay out how it all works. If people are interested, perhaps I’ll do a Q & A style post later in the week on the overall process.
Ok. Bare-bones basic federal budget process in five sentences. At the beginning of a fiscal year, the agencies of the federal government begin developing their budgetary plans for the following fiscal year, which are aggregated and vetted by OMB and others in the President’s administration. Under law, the President is required to submit to Congress by early February a comprehensive Budget of the United States for the fiscal year that begins the following October 1. The budget includes proposals and an accounting of incoming collections (revenue and offsetting) and spending (authority, obligations, and outlays), following standardized government accounting practices that have developed over the years. Under the Constitution, no money may be drawn from the Treasury except by appropriation made by law, and therefore Congress must either pass annual, multi-year, or obligation-creating laws that provide the budget authority requested by the President, or ignore the President, make their own budgetary judgements, and provide that amount of budget authority. In addition, Congress must provide either a mechanism for revenue or other collections to cover the spending, or an authorization for the United States to incur debt.
Got it? Good. Bare-bones basic congressional budget process in five sentences. Beginning in 1974, Congress has enacted a series of laws and chamber rules that require legislators to adopt a resolution that sets for the aggregate levels of revenue, spending, deficit, and debt limit. Under law, the Budget Committee reports — and the chambers approve — a concurrent resolution that provides these budgetary projections or the upcoming fiscal year and future out-years, as well as mechanisms to constrain both direct spending (i.e. entitlement spending) and discretionary spending. Direct spending is controlled through the process of reconciliation instructions, which may instruct the standing committees that have jurisdiction over various direct spending to report changes to those programs. Discretionary spending is constrained by providing an allocation (known as a 302(a) after the Budget Act of 1974 section it comes from) to the Appropriations committees, which sets a maximum amount of budget authority that the committee may report to the floor and provides points of order against consideration of bills which exceed the limit.
Got it? Good. Now here’s where it gets interesting. What effect does the existence of the 302(a) allocation have on the House Appropriations Committee?
A huge impact. And lots to discuss.
First, what actually happens when the Appropriations Committee gets the 302(a) allocation from the approved budget resolution? Under law, they are required to divide it up among the subcommittees, into what is know as 302(b) allocations, which they then approve and forward to the floor. (Here’s an example). These 302(b) allocations are the maximum amounts which each subcommittee may report to the floor in their bills, and are enforced by points of order on the floor. If you step back for a second and give it some thought, you might arrive at a logical institutional conclusion: under the 302(a) and 302(b) system, individual subcommittees of the Appropriations Committee are not particularly capable of reducing spending, since they are set in competition for part of what is ultimately a fixed-size pie. And, indeed, that is what you often see with the subcommittees; absent an ability to constrain aggregate spending by reducing their own consumption, the subcommittees instead jockey and lobby for larger shares of the already-decided whole pie.
This arrangement has consequences big and small. From a macro point of view, the very existence of the 302(a) pushes the bulk of the labor to restrain spending off of the Appropriations Committee and onto the Budget Committee, both intellectually and functionally. Prior to the existence of the 302(a) allocations, the Appropriations Committee was front in center if federal spending created huge deficits or was otherwise seen as too high. And consequently, the committee was regularly stocked by somewhat more fiscally conservative Representatives and led by fiscally conservative chairmen, who often saw their primary job as oversight, not appropriations. Under the modern system, on the other hand, the Appropriations Committee cannot exceed the 302(a) allocation both chambers of Congress have just approved. And thus the duty to constrain spending falls on the Budget Committee, rather than the Appropriations Committee.
As described above, at the micro-level this has serious consequences for how the subcommittees operate. Imagine you are a subcommittee clerk working with a subcommittee chair. Even if you care about restraining aggregate spending, you can’t really do that. You can certainly restrain your own subcommittees spending, but that shouldn’t be mistaken for restraining aggregate spending. For if you deliver a bill that comes in below your 302(b) allocation, the portion of your allocation that you didn’t use can simply be transferred for use on another bill coming out of another subcommittee. In fact, the Appropriations Committee is authorized to, and routinely does, reserve a portion of the 302(a) allocation to the full committee, which it can then use as needed if unforeseen budgetary situations arise between April and when the bills are finished later in the summer.
This points to another strategic dynamic: it’s not the worst thing in the world to be one of the last bills the committee reports out to the floor, because there’s often a bunch of money left over in the 302(a), either because the full committee’s reserve has not been used, or because spending was cut through amendments on the House floor. That’s right, when floor amendments cut spending, the equivalent spending isn’t taken out of the 302(a) allocation, and therefore it’s quite difficult to constrain aggregate federal spending by using floor amendments to cut an individual bill. Even worse, an amendment could be offered behind you to put the money back in to a different part of the bill.
Both of these concerns are somewhat mitigated by the “spending reduction accounts” created under rule in each bill at the beginning of the 112th Congress, which traps money cut by floor amendment in a functionally-fictitious account within the bill, theoretically blocking attempts to reinstate the money or to transfer it out of the bill. Even this, however, is far from airtight, since it doesn’t actually adjust the 302(a) allocation, and therefore doesn’t preclude use of reduction funds at a future stage, such as during consideration of a conference report. And in the House, the leadership can usually resort to a special rule to block points of order, if necessary, so long as they can get their caucus to support the rule.
In a very tight fiscal climate, of course, none of this really matters. When each appropriations subcommittee is facing the possibility of a net cut in funds relative to the previous fiscal year, there are very few Members or clerks seeking to further reduce funding beyond their 302(b) allocation. And consequently, it truly becomes a question of trying to get as large of a piece as possible from the divided pie. It’s not an exaggeration to say that the 302(b) allocation is the key piece of information that the subcommittee is waiting all Spring to receive. What are they doing in the meantime? Well, mostly working with the agencies under their jurisdiction to understand and conduct oversight of the agency budget requests and justifications, holding related hearings on those requests and justifications, and doing both formal and informal budget drills. But sometimes, eventually, just waiting around for the number.
The budget drills — which are nothing more than producing proposed numbers for your bill and seeing how it adds up — are in some ways key. It’s common for the full committee front office to request that the subcommittees do formal drills at different allocation levels (say, flat, 1% increase over last year, 2%, and 3%), and report back their findings to the front office. Such exercise are both instructive practice and strategic opportunities for the subcommittees, who are of course jockey and lobbying for their 302(b) allocations. They allow the subcommittee staff to see how short they are against competing agency requests and therefore begin to plan priorities, but they also allow them to highlight to the front office how bad a low-end allocation might be for items in their jurisdiction. And so the strategic incentives are often to report budget drill numbers that are the equivalent of agency threats to close the Washington Monument; it’s helpful to spot drill shortfalls in highly visible locations. Double helpful if you are in a zero-sum competitive environment and every other subcommittee has the same incentive.
Now, I’ve barely scratched the surface here. There’s a lot more that can be said. But my bottom line is that observes often overlook how the modern congressional budget process has affected the appropriations process. The reality is that it has fundamentally transformed it, both formally and in the practices and strategies employed by the subcommittee staff and chairs. Not necessarily for better or worse, but definitely for sure. And while there have been lots of changes to the practice of appropriations in the last few decades — most notably the larger role of the leadership in developing the subcommittee bills, the increased use of special rules to block floor amendments to the bills, the increased power of the full committee over the subcommittees, and the proliferation (but eventually shut off) of the earmarking within the bills — it’s my hunch that a lot of the changes are, at root, connected to the existence of the Budget Act and the constraints of the 302(a)-302(b) system.
